Semiconductor sector sees market recovery

MANILA, Philippines—The semiconductor industry may be on its way to recovery, as capacity utilization of manufacturing plants worldwide have started to pick up this quarter.

Research firm iSuppli Corp. said capacity utilization was expected to rise to 60 percent in April to June, the first such increase in a year.

In the first quarter, it said capacity utilization was only at 49 percent.

“The expected rise in utilization rates in the second quarter signals that the semiconductor industry has entered into the recovery phase,” iSuppli director and chief analyst for semiconductor manufacturing Len Jelinek said in a statement.

To keep pace with the decline in global demand, most chip manufacturers last year cut their workforce and shut down equipment deemed unnecessary.

These moves brought global semiconductor manufacturing capacity down to 732 million square inches of silicon in the first quarter, from 756 million the quarter before.

“These actions are paying off. The results will be manifested in the form of improving margins for semiconductor integrated device manufacturers and pure-play foundries in the second quarter,” Jelinek said.

“Depending on how effectively they’ve cut costs and adjusted to reduced demand, companies will be able to show solid financial improvements,” he added.

As plant capacity is now aligned with demand, iSuppli sees utilization further improving to 75 percent in the third quarter, before slightly declining again in the last quarter. –Abigail L. Ho, Philippine Daily Inquirer